How to convert the US dollar into the foreign exchange standard

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Published: Mar 2019 The idea of ​​adopting a global currency has been around for a long time, but to this day implementing this idea in practice is still a long way off. You may be wondering what we mean by the global currency, or if its use has certain benefits that are not provided by the system of using different currencies. Today's Learn article will give you the answer to these questions. What do we mean by global currency? The global currency, as its name expresses, is a currency accepted and used everywhere. Which should come as a result of agreements between different governments in the world to use a unified financial system. It can be said that it is a mandatory "euro" for all countries of the world, and there is no doubt that the idea of ​​a global currency has been greatly enhanced by the success of the euro. There is no doubt that the use of a global currency may improve global trade since it will become more like conducting domestic business transactions. Creating a single global currency requires the establishment of a global monetary union that can solve currency-related crises and avoid economic risks. Not only that, as this international organization will have the responsibility to ensure compliance with the rules, and to address any existing or emerging problems regarding the way currencies are dealt with in order to enable global trade and assess the tax system in different countries. When talking about the global currency, the following question might come to mind: Is the US dollar really a global currency as is English being a global language? In fact, the US dollar is very similar to the English language, it is widely used all over the world, but voluntarily. It is true that some are forced to use the English language, but that is because they have chosen the circumstances that compel them to do so, such as seeking to build business relationships. The countries of the world are not obliged to learn English, but they choose to do so because of their desire to access things in English. Likewise with the US dollar, it is true that it is necessary for many countries of the world, but its use is not mandatory, unlike the euro, which is the official currency of the members of the European Union, as it replaced the local currencies used in those countries. As for the dollar, it is used by many countries that hold reserves of it because the value of their currencies is tied to it. Here is a brief history of how the US dollar became the standard for foreign exchange: In the past, most countries of the world relied on gold as the standard for currency exchange, as foreign currencies are tied to the value of gold. However, this system was no longer suitable for international trade over time, which led a number of governments to eventually conclude the Bretton Woods Agreement in 1944, which paved the way for the US dollar to become the standard for determining the value of a country's currency. Thus, countries that were parties to the agreement were allowed to back their currencies with dollars instead of gold. Based on the above, the US dollar is not a global currency but rather a globally commonly used currency that serves as the basis for determining foreign exchange rates. In order for it to become a global currency, it must be used by all or “most” countries of the world and to replace the local currencies in those countries, so there is no need to set or convert foreign exchange rates. Some believe that Bitcoin has a better chance of becoming a global currency, but it is still too early to determine this, especially after many have lost their interest in cryptocurrencies following the noticeable drop in the price of Bitcoin.

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